Ryanair (Dublin) announced third quarter profits of $24.1 million (โฌ18 million), up $4 million (โฌ3 million) on last year despite an $109 million (โฌ81 million) increase in fuel costs.ย Revenues rose 15% to $1.3 billion (โฌ969 million) as traffic grew 3% to 17.3 million passengers.ย Unit costs rose 11% mainly due to a 24% (โฌ81 million) increase in fuel.ย Excluding fuel third quarter unit costs rose by 4%, while average fares improved by 8%.
Summary Q3 Results (IFRS) in Euro.
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Q3 Results (IFRS) โฌ
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Dec 31, 2011
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Dec 31, 2012
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% Change
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Passengers
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16.7m
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17.3m
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ย +3%
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Revenue
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โฌ844m
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โฌ969m
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ย +15%
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Profit after Tax
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โฌ14.9m
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โฌ18.1m
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ย +21%
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Basic EPS(euro cent)
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1.02
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1.25
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ย +23%
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Ryanairโs CEO Michael OโLeary said:
โOur Q3 profit of โฌ18m was ahead of expectations due to strong pre-Christmas bookings at higher yields.ย The 8% rise in avg. fares reflects our improved customer service, record punctuality and the successful roll out of our reserved seating service.ย Our fuel costs rose โฌ81m, (+24%), slightly less than expected as oil prices increased 22% (from $84pbl) to $102pbl.ย Excluding fuel, Q3 unit costs rose 4% due to excessive increases in Italian ATC costs, Spanish airport charges, and the strength of Sterling to the Euro.ย Ancillary revenue performed strongly and rose 24% to approx. โฌ13 per pax.
New Routes and Bases.
Our new routes and bases are performing well in their first winter, although some smaller bases such as Budapest and Warsaw are doing so at very low prices.ย Our 51st base Maastricht opened in December, and we will open 6 new bases (total 57) from April in Eindhoven, Krakow, Zadar (Croatia), Chania (Greece), Marrakesh and Fez (Morocco).ย Significant capacity cuts by Legacy and other struggling EU carriers continue to offer us substantial growth opportunities across Europe.ย We expect further capacity cuts and restructurings in Europe as high fare, loss making carriers struggle to compete with Ryanairโs expansion at low prices. During Q.3 Iberia, AFKLM, Air Berlin, and Lufthansa all announced major restructurings.ย Both LOT and SAS are seeking further state support while the Swiss charter airline โHelloโ has closed.ย These trends will create more growth opportunities for Ryanair to grow profitably to 120m passengers over the next decade.
Customer Service.
Our industry leading customer service continues to improve as demonstrated by the following YTD milestones:-
ยทย ย 93% of all Ryanair flights arrived on time (a new record).
ยทย ย Lost bags have fallen to less than 1 per 3,000 pax.
ยทย ย We cancel less than 4 flights in every 1,000.
No other EU airline can match Ryanairโs fares or this level of passenger service.ย The addition of reserved seating to our priority boarding service in 2012 has been very well received and a recent survey of Ryanairโs traffic in Spain (where Ryanair is the largest carrier) highlighted that 22% of our passengers were travelling on business.ย A survey of 10,000 passengers in December also yielded the following results:-
ย ยทย ย 87% were satisfied or very satisfied with their Ryanair flight.
ยทย ย 93% said they would fly Ryanair again.
ยทย ย 95% said Ryanair provide excellent value for money.
Ryanair Strengths.
Ryanairโs ex fuel passenger cost of โฌ27 (ytd) is lower than any carrier in Europe.ย Our average fare of โฌ50 is (by some distance) lower than any other EU carrier.ย Our tight cost management, at a time when competitor costs are rising faster, will enable Ryanair to expand our price and cost leadership over all other EU airlines for the foreseeable future.ย The combination of Ryanairโs industry leading costs and customer service, strong cash flows and balance sheet, gives Ryanair a unique platform to deliver its next decade of growth as we target a 20% share of the EU short-haul market by growing to over 120m pax p.a.
Stansted Airport Sale
The sale of Stansted should be completed by the end of Spring.ย We welcome its purchase by MAG and look forward to working with them (as we do currently in Manchester, East Midlands, and Bournemouth) to grow Stanstedโs low fare traffic back over 23m, where it was in 2007 before the BAA monopoly doubled Stanstedโs fees.ย We also welcome the CAAโs announcement that is โminded toโ rule that Stansted has market power, and will needย effectiveย regulation to protect Stansted users from exploitation by the airport monopoly particularly when โthere is evidence to suggest that Stansted is pricing above the competitive levelโ.
Aer Lingus Update.
Under Irish Takeover Panel rules we are unable in these results to update on our offer to acquire Aer Lingus.ย Accordingly we are issuing a separate announcement on this matter today.
Ryanairโs CEO Michael OโLeary said:
โRyanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus.ย We believe these remedies address every current Ryanair\Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections. The remedies involve two upfront buyers each basing aircraft in Ireland to takeover and operate a substantial part of Aer Lingusโ existing route network and short-haul business.ย This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers.ย We look forward to completing our offer for Aer Lingus subject to receiving approval from the EU competition authorities in early Marchโ.
Hedging & Balance Sheet.
We have recently extended our fuel hedges to 75% of FY 14 at $97pbl and hedges on our fuel exposures at $1.32.ย At current rates our FY14 fuel cost per passenger will rise by approx. 5%, compared to a 14% increase in FY13.
A 2ndย special dividend of โฌ492m (โฌ0.34 per share) was paid to shareholders in Q3, bringing to โฌ1.53bn the funds returned by Ryanair to shareholders over the last five years.ย Ryanairโs balance sheet remains one of the strongest in the industry, with closing Q3 gross cash of โฌ3.15bn.ย We expect the year end net cash to be positive despite directly owning over 70% of our fleet of 305 young Boeing 737-800s.
Outlook.
Our Q3 yields were boosted by stronger pre-Christmas bookings, while lower than expected operating costs delivered slightly better profits than forecast.ย However Q4 traffic (as previously guided) will drop by approx.400,000 passengers (-3%)below last yearโs Q4, due to our grounding up to 80 aircraft which limits the impact of high oil prices, high airport fees at Stansted and Dublin, and seasonally weaker Q4 demand.ย On the basis of this improved Q3 result, our capacity cuts and limited visibility over Easter bookings and yields, (although we have seen some yield softness in January), we now expect our full year profits to exceed our previous guidance (of โฌ490m to โฌ520m) and rise close to โฌ540m, a 7% increase on last yearโs profits despite a 19% increase in our oil costs.
Copyright Photo: Antony J. Best. Boeing 737-8AS EI-CSA (msn 29916) arrivs at the London (Stansted) hub with promotional Scotland stickers.
Ryanair:ย 
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